Georgia Passes SB 494: New Rules and Regulation for Hemp

  1. Significant Provisions and Rule Changes
  2. Licensing Requirements
  3. Licensing Restrictions
  4. Application Process for Licensing
  5. Fee Structures
  6. Surety Bond Rules
  7. Penalties and Enforcement
  8. Definition and Impact on THC-A
  9. Provisions Effective July 1, 2024
  10. Provisions Effective October 1, 2024

The Georgia Senate passed SB 494 titled “Georgia Hemp Farming Act” in order to further regulate hemp products within the state of Georgia. In this article we will review the key points and new rules set in place with the passing of this bill.

Senate Bill 494 expands the regulatory framework for hemp production in Georgia, introducing new licensing categories, revising fee structures, and setting strict penalties for non-compliance. The bill is designed to streamline the operational aspects of hemp cultivation and sales, ensuring products meet safety standards through mandatory testing and adherence to both state and federal regulations..

Significant Provisions and Rule Changes:

  • Age Restrictions: Prohibits the sale, purchase, or possession of consumable hemp products by individuals under 21, aligning hemp regulations with those for tobacco and alcohol.

  • Enhanced Regulatory Powers: Grants the Department of Agriculture expanded enforcement authority, including criminal law enforcement related to hemp regulation.

  • Labeling and Packaging Requirements: Introduces specific requirements for labeling and packaging, including QR codes and child-resistant features.

  • Contaminant Levels and Certificates of Analysis: Establishes maximum contaminant levels and requires certificates of analysis for all hemp products.

  • Testing and Inspection: Specifies detailed procedures for the Department of Agriculture to inspect and test hemp products.

  • Bonding and Permit Fees: Updates the bonding requirements and adjusts fees for hemp processor permits.

  • Licensing Provisions: Outlines detailed application requirements and operational stipulations for various licensing categories.

  • Restrictions on Advertising: Imposes restrictions on hemp product advertising to prevent appeal to individuals under 21.

Licensing Requirements:

Hemp Grower License: Required for individuals or entities to handle and cultivate hemp in Georgia.

Hemp Processor Permit: Necessary for processing hemp; includes converting hemp into marketable forms.

Retail Consumable Hemp Establishment License: For businesses that prepare or sell prepackaged consumable hemp products directly to consumers.

Wholesale Consumable Hemp License: For entities selling consumable hemp products in bulk to retail establishments.

Manufacturer License: Required for businesses that manufacture hemp products in Georgia.

Registered Laboratory: For labs that test or analyze hemp or hemp products, ensuring compliance and safety.

Licensing Restrictions:

  1. Age Limitation: No licenses will be issued to any individual under the age of 21. This aligns with the restrictions on the sale and purchase of hemp products to ensure that all participants in the industry are of legal age.

  2. Criminal Background Checks: No license shall be issued to any applicant who has been convicted of a felony related to a state or federally controlled substance within 10 years of the date of the application. This is to ensure that individuals involved in the hemp industry do not have recent serious legal violations related to controlled substances.

  3. Good Standing: Applicants must be in good standing with no recent compliance violations with state or federal agricultural or hemp-specific regulations. This ensures that the licensees have a history of adhering to regulatory frameworks.

  4. Operational Requirements: For manufacturing, wholesale, and retail licenses, the applicants must specify the location where the activities will be conducted. This must include details whether these premises are owned or leased by the applicant, ensuring that the operational bases comply with local zoning and other relevant regulations.

  5. Specific Requirements for Laboratories: Laboratories that test hemp and hemp products must register with the state and demonstrate their independence from growers and processors to avoid conflicts of interest. They must also meet certain standards set by the state, including possibly adhering to the International Organization for Standardization (ISO) standards.

Application Process for Licenses:

Each type of license has specific application requirements, generally including:

  • General Requirements: Name and business address of the applicant, telephone number, email address, and operational details such as location and ownership structure.

  • Specific for Each License:
    • Retail and Wholesale Licenses: Details on the location where products will be sold or stored and whether these premises are owned or leased.

    • Manufacturer License: Location of the manufacturing facility and operational details.

  • Fees: Vary by license type and are determined by the scale of operations or the volume of products handled.

Fee Structures:

  1. Hemp Processor Permit: The fee for a hemp processor permit has been set at $10,000 annually. This fee is designed to cover the extensive regulatory oversight required for processing activities, which include converting raw hemp into marketable and consumable products.

  2. Retail Consumable Hemp Establishment License: These range from $250 to $4,000, depending on the scale of the operation. This structured fee range is intended to accommodate both small and large retail operations, ensuring that all entities contribute fairly to regulatory costs.

  3. Wholesale Consumable Hemp License: The fees for wholesale licenses range from $500 to $10,000. This tiered structure is based on the volume of products handled, with higher fees imposed on larger distributors to reflect the greater regulatory responsibilities.

  4. Manufacturer License: Set at $5,000, this fee covers the cost of regulatory oversight for manufacturers who produce hemp products within Georgia, ensuring compliance with safety and state regulations.

  5. Laboratory Registration Fee: Laboratories that test or analyze hemp or hemp products are required to pay a one-time registration fee of $250. This fee supports the initial registration and setup process, ensuring laboratories meet the standards necessary for accurate and independent testing.

Surety Bond Rules

Applicants for a hemp processor permit must provide a surety bond executed by a surety corporation authorized to transact business in Georgia. The bond amount varies depending on the volume of hemp purchased from hemp grower licensees by the permittee in the most recent calendar year:

  • Minimum Bond Amount: $20,000
    Maximum Bond Amount: $1 million

  • Cost of Bond: While the cost of the surety bonds are not set in stone and can vary based on the provider and the applicant, we can provide some general costs. A $20,000 surety bond will generally cost somewhere between $200 and $3,000 dollars, depending on a variety of factors. A $1,000,000 surety bond will generally cost somewhere between 1-15% of the bond, meaning a $10,000-$150,000 range.

    This bond ensures the faithful accounting for and payment to hemp grower licensees and compliance with the regulatory requirements.

Penalties and Enforcement:

  • Illegal activities without proper licensing can lead to misdemeanors, with a first offense being a simple misdemeanor and subsequent offenses elevated to misdemeanors of a high and aggravated nature.

  • Civil penalties of up to $5,000 per violation can be imposed, and each day a violation continues is considered a separate offense.

  • Specific restrictions include prohibitions on selling unprocessed hemp flowers or leaves at retail and growing or handling hemp in residential structures.

Definition and Impact of THC and THCA

  • THC Definition: THC is defined in the bill as tetrahydrocannabinol, tetrahydrocannabinolic acid (THCA), or a combination thereof.

  • Impact on THCA Sales: Including THCA in the definition of THC aligns the regulatory approach to both active and inactive forms of THC. This adjustment is significant because it affects the sale and regulatory oversight of products containing THCA, which can convert to THC upon decarboxylation (a process that occurs through heating). This inclusion likely tightens controls over products that could otherwise circumvent regulations due to THCA’s non-psychoactive status in its natural form.

It appears that THC-A products containing a combined amount of Delta-9 THC + THC-A above 0.3% will no longer be allowed to be sold in Georgia after October 1, 2024.

Provisions Effective July 1, 2024

Certain critical aspects of the bill, specifically those related to immediate regulatory changes and enforcement powers, are likely to become effective. This could include:

  • Enhanced Regulatory Powers: The expanded enforcement authority granted to the Department of Agriculture might be among the provisions set to take effect early. These include the authority to enforce criminal laws related to hemp regulation and the expanded powers for designated investigators.

  • Licensing Provisions: New licensing requirements and structures for hemp grower licenses, processor permits, and retail licenses might be activated to provide a framework for applications and compliance ahead of broader commercial activities.

Provisions Effective October 1, 2024

This later date likely encompasses the full implementation of the bill, including:

  • Testing and Inspection Protocols: The detailed procedures for testing and inspection by the Department of Agriculture, ensuring products meet established safety and quality standards.

  • Bonding and Permit Fees: Adjustments to bonding requirements and fees associated with hemp processor permits.

  • Restrictions on Advertising and Sale: The full suite of restrictions on advertising, particularly those targeting the prevention of marketing to individuals under 21, and the operational restrictions on sales and distribution might come into effect.

  • Labeling and Packaging Requirements: Requirements for labeling and packaging, including the use of QR codes and warnings that the products contain THC, are set to be enforced from this date.

  • Complete Regulatory Framework and Compliance Requirements: All encompassing regulatory measures, compliance checks, and penalty structures are likely set for full enforcement beginning October 1, 2024.

These staggered effective dates are designed to allow for a structured rollout of the new regulations, ensuring that all parties involved have the time and information necessary to adjust their practices and operations accordingly. It’s crucial for businesses in the hemp industry in Georgia to pay close attention to the specific dates as they prepare for compliance with the new regulations. For the most accurate and detailed information, consulting the final text of the bill or direct communications from the Georgia Department of Agriculture is recommended.

All information has been pulled directly from the SB 494 text, to read the full bill please visit: Final Bill Text

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